Durban - Cash-strapped citizens are not prepared to pay more in income tax and a suggestion to the Minister of Finance is that he creates a new income source through the tourism sector.
Enoch Godongwana will deliver the 2023 Medium Term Budget Policy Statement (MTBPS) on Wednesday and the Chartered Institute for Business Accountants (Ciba) is hoping the minister will not further burden taxpayers, but come up with new ideas to grow the economy. Ciba CEO Nicolaas van Wyk said the country had a large debt to repay and social services to maintain.
Therefore, Godongwana had to decide how he would fund these. Determined to get taxpayers behind him, Van Wyk launched a petition to reduce personal income tax ahead of the Budget speech, and almost 30 000 people have so far agreed with him. “The South African tax base is very small, and they are already carrying a big tax burden.
They are carrying millions of people on their shoulders, slogging long hours, not spending time with their families and are not able to start a hobby because they are working so much,” he said.
He said if the country attracted more tourists, the government would not have to tax its people more. “A safe and accessible South Africa can attract millions of tourists that will spend their cash buying local products and creating employment. Therefore, Ciba doesn’t think you should pay more in income tax,” he said.
Lullu Krugel, chief economist at PricewaterhouseCoopers (PwC), a business services company, said they wanted to see personal income tax relief. However, that was unlikely to happen until the fiscal deficit was under control and the tax base broadened. “Ideally, to further promote fiscal transparency, an annual review of the tax tables and monetary amounts should take place and be included in the Budget as many salaried employees are currently incurring, and will continue to incur in the year ahead, non deductible expenditure due to remote working arrangements.
“It is hoped that the National Treasury’s review will be expedited and that Budget 2023 will introduce some tax relief for expenses that result from this new way of working,” she said. PwC’s 26th Global CEO Survey revealed that 59% of South African CEOs expected local economic growth to decline this year.
“It is PwC’s wish for Budget 2023 to be encouraging to the business community and to lift business sentiment by providing an update on progress made in key economic and structural reforms, as well as solutions towards the country’s energy and transport challenges,” she said.
Based on the conservative economic growth forecasts published by the Reserve Bank in January, PwC predicts that the National Treasury will make a downward revision to its growth predictions.
“A conservative approach to the economic growth outlook will provide realism into the outlook for fiscal revenues,” said Krugel. She added there were many areas where Godongwana would face expenditure pressures and that they hoped he would opt for Budget relocations.
Large risks to expenditure included Eskom, Transnet as well as the public sector wage bill. “The finance minister needs to make clear what his plans are with regards to the transfer of Eskom debt to the sovereign’s balance sheet.
We would like to see the minister make public all the conditions, requirements and stipulations associated with this deal. “The National Treasury should also make clear how this will impact consolidated expenditure and, ultimately, the taxpayer,” she said.
She said that the MTBPS 2022 had promised clarity on the pledge to move a large proportion of Eskom’s debt to the sovereign balance sheet. Therefore, they expected Godongwana to provide clarity on a timeline for this process. “We would like to see a comprehensive update about the restructuring of Eskom.
While there has been some progress in restructuring the utility, the process is behind schedule and weighing on the South African economy,” she said. Krugel said that the Budget speech made limited reference to credit ratings and the minister should use Wednesday to announce the progress made in the key areas observed by ratings agencies.
SUNDAY TRIBUNE